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Europe

Ifo German Business Sentiment: Smaller-Than-Anticipated Deterioration
The message from the German Ifo is that although business sentiment continues to weaken, the pace of deterioration slowed in September and appears to be in the process of bottoming. The Business Climate Index’s marginal 0.1-point decline to 85.7 delivered…
Daily Insights
Overweight European Energy Stocks
According to BCA Research’s European Investment Strategy service, energy stocks are an appealing overweight as a hedge against oil supply cuts. For now, the earnings of the energy sector continue to lag that of the broad market. However, relative earnings…
Daily Insights
Focus On Three Sectors

European stocks and the euro continue to weaken; soon, they will test the bottom of their recent trading range. Which sectors can protect investors against this downdraft?

European Investment Strategy by Mathieu Savary
The BoE Stands Pat
The Bank of England’s Monetary Policy Committee voted 5-4 in favor of maintaining its bank rate at 5.25% on Thursday. The four members that voted against the pause all preferred a 25-basis point rate increase. The tight margin underscores that the decision to…
Daily Insights
Oil: What Could Go Wrong?

We continue to expect Brent crude to trade just above $101/bbl in 4Q23, and to average $118/bbl in 2024. Higher volatility looms. We expect Russia will cut oil production next year as part of a concerted effort to undermine Biden’s re-election. Oil-demand volatility is set to rise in response to divergent policy imperatives. We continue to favor equity exposure to oil and gas via the XOP ETF; direct exposure via the COMT ETF, and long Dec23 $100/bbl Brent calls. We are getting long Jan-Feb-Mar 2024 Brent futures vs. short the same months in 2025 expecting steeper backwardation as inventories draw and markets tighten.

Commodity & Energy Strategy
Record German PPI Deflation Confirms Benign Inflation Outlook
Collapsing German producer prices continue to indicate that inflationary pressures are moderating in the Eurozone. Total PPI declined by a record 12.6% y/y in August following a 6.0% y/y drop in July. While the annual decline mainly reflects the impact of…
Daily Insights
On The Underperformance Of Scandinavian Currencies
Scandinavian currencies are bearing the brunt of the recent US dollar strength. The Swedish krona and Norwegian krone are the worst performing G10 currencies since the DXY’s mid-July bottom, losing 8.6% and 7.6% of their value vis-à-vis the USD, respectively.…
Daily Insights
UK Inflation Surprise Opens The Door To A Less Hawkish BoE
The August UK inflation report produced a large downside surprise. Headline CPI rose +0.3% month-on-month, versus expectations of a +0.7% increase. Year-over-year headline CPI inflation slowed to 6.7% from 6.8%, a sizeable miss versus the consensus forecast…
Daily Insights
Fourth Quarter Geopolitical Outlook 2023

China’s reopening faltered and now it is applying moderate stimulus. OPEC 2.0’s production discipline is getting results, with oil prices climbing. The Fed will not be able to deliver dovish surprises in Q4 2023. Investors should expect stock market and commodity volatility and prefer defensive positioning.

Geopolitical Strategy by Matt Gertken
Challenges Ahead For German Auto And Components Sector
The German auto and components sector is under stress. Year-to-date, the sector’s equity prices have declined by 3.5% relative to the broader German market, and multiple indicators suggest that further challenges lie ahead. One significant concern is the…
Daily Insights

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